Choosing a financial adviser as a high net worth individual: a guide

Choosing a financial adviser can seem like a daunting task. Many people have negative connotations of financial advisers from a time when financial advice was sales and commission led.

Thanks to stricter regulations in more recent years, the way financial advice is delivered has evolved for the better. Stricter regulations call for financial advisers to be more qualified and have banned commission led sales.

The benefits of having an adviser

Since then, it has been proven that seeking financial advice can often improve finances dramatically. Receiving professional advice between 2001-2006 boosted wealth (in pensions and financial assets) by £47,706 in 2014/2016* (*what it’s worth; Revisiting the value of financial advice, ILC UK).

According to the 2021 Value of Advisor Study, Russell Investments financial advisers in the US add 4.83% of the value each year, through active rebalancing of investment portfolios, behavioural coaching, customised planning and more.

With so much potential value to be added, choosing the right financial adviser for you is integral to your wealth journey.

Interview your financial adviser

We hear so much about what to look for and what to avoid in financial advisers or financial planners, so let’s be honest – taking time to find the right one, should not be any different to buying a new house or looking for a new job. So, when choosing a financial adviser, it is important to interview your potential ‘candidates’.

Here are some key tips when contacting them initially:

• Take your time – this is a relationship that will hopefully last a lifetime, make sure it’s right.
• Forewarned is forearmed – do some research, google the company, do they have reviews, what is their website like, and ask your friends if they have suggested someone.
• Financial Planners are not always the same as Wealth Managers – financial planning is more than just investing money, it’s about structuring your finances in the best and most efficient way to let you live the life you want. More often than not, the structure is more beneficial than elaborate investments.
• Meet with a shortlist – This is an opportunity to find the right fit – find three firms you like and have a chemistry session with them all.
• Don’t get locked in – lock in fees is archaic and wrong in my view – if the adviser is good enough, they shouldn’t need them. Don’t get trapped.

Focus Point

The most important aspect of financial planning, and therefore the selecting a financial adviser, will be their understanding of what is important to you: your financial responsibilities, your goals, and your aspirations.

Any financial adviser or wealth manager worth their weight in salt can invest your money, however determining the nuances of your story and building a plan around that, is far more difficult.

What to listen out for:

• Where is their focus? Is it on you and your life, or on your money and their fancy investments? If it is the latter, run for the hills.
• Make sure they explain in detail why they have recommended something and how this meets your needs
• If you were to go ahead with their plans, what do they say you will be discussing next year?
• How do they talk about areas that worry you?

Experience

While devoting years to a profession is important, it is by no means a guarantee of quality. I have seen advisers with over 25 years of experience whose advice leaves a lot to be desired, while many relatively new planners are able to produce a life changing plan and provide complete clarity to their clients.

Financial planning is all about sharing a vision of your future and working out a way to best achieve this. Don’t forget this!

Questions to ask:

• Broadly speaking, what areas of financial planning do you cover?
• Are you independent to restricted? Are you independent to restricted? Independent advisers will have the whole of the market available to them while a restricted adviser may only have certain areas or products to work with. Ensuring you are speaking to someone who will provide holistic financial advice, based on your overall position is the key thing here. This goes for both independent and restricted advisors.
• What qualifications do you have? – having or working towards Chartered or CFP designations demonstrates the adviser’s desire to develop. It should also provide a wider scope of areas that are able to help you. It’s therefore a reasonable suggestion to ensure any potential adviser has more than just a basic diploma.
• Based on our conversation, do you think I need an adviser?
• Do you have clients who are in a similar position to me? How did you help them?
• Assuming they have suggested they are different, why not ask what makes you think your way is better than your competitors?
• Where do you see your company in 5 years? – You are looking for a long-term partnership, an adviser who is settled should have a reasonable answer for this.

Due to the varying degrees of quality in financial planners and the different types of services available, it is important to exercise caution and do your research when choosing the right person for you. However, once you have found the right adviser your research and caution will prove worthwhile as they can help you to achieve your financial goals and look after your loved ones.

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.